Employee Retention Strategies for Hourly Workers: A Guide for Employers
By Tax Benefit Strategies | Published October 30, 2026 | Updated November 2026 | 6 min read
Restaurants, home care agencies, assisted living communities, staffing firms and contractors lose hourly workers faster than almost any other employers. Every person who leaves costs money to replace.
This guide shows the real turnover numbers, what turnover costs, and seven retention strategies that work for hourly teams. It also shows how to add benefits hourly workers use without adding cost.
Why Is Turnover So High in Hourly Industries?
Hourly jobs have more shift work, less predictable hours and lower pay, and workers can often find a similar job nearby. Federal data shows restaurant and hotel workers quit at about twice the national rate.
The Bureau of Labor Statistics (BLS) tracks quits and total separations (quits, layoffs and other exits) each month in its JOLTS survey. These are the 2025 monthly averages:
| Industry (BLS) | Quits per month | All separations per month |
|---|---|---|
| All industries | 2.0% | 3.3% |
| Accommodation and food services | 4.2% | 5.5% |
| Professional and business services (includes staffing) | 2.3% | 4.6% |
| Construction | 1.8% | 4.0% |
| Health care and social assistance | 2.0% | 2.9% |
A 5.5% monthly rate adds up to roughly two-thirds of the workforce over a year. Industry averages also hide the hardest jobs. In home care, the Activated Insights 2024 Benchmarking Report put caregiver turnover at 79.2% a year.
What Does Employee Turnover Cost?
A Center for American Progress review of published case studies found that replacing a worker who earns less than $30,000 a year typically costs about 16% of that worker's annual pay. Most of the cost is hidden in time, not invoices.
Example: An hourly employee earns $14 an hour for 2,000 hours, or $28,000 a year.
- Cost to replace one worker: $28,000 × 16% = about $4,480
- A 100-person company that replaces 60 workers a year: 60 × $4,480 = about $268,800 a year
That cost comes from job ads, interviews, background checks, training hours, overtime for the people who cover open shifts, and slower, less accurate work from new hires. Each worker you keep is money you do not spend.
7 Retention Strategies That Work for Hourly Teams
1. Make schedules predictable. Post schedules at least two weeks ahead, keep shifts steady where you can, and let workers swap shifts through an app. Some cities and states have predictive scheduling laws, so check the rules where you operate.
2. Pay more often, or give access to earned pay. Many hourly workers live paycheck to paycheck. Weekly pay or an earned wage access (EWA) tool lets them get money they have already earned before payday. Check the fees employees pay and your state's rules before you choose a provider.
3. Plan the first 90 days. New hires decide quickly whether to stay. Give each one a trained buddy, a clear first-week plan and short check-ins at day 7, 30, 60 and 90. Ask what is not working and fix it.
4. Train your shift leads and managers. Gallup estimates that managers account for at least 70% of the variance in employee engagement across business units. A supervisor who is fair, respectful and consistent keeps people. Train front-line managers before you promote them.
5. Show a path up. Publish clear steps from crew member to shift lead, or from aide to senior aide. Tie small raises to tenure and skills, and cross-train people so they can earn more hours.
6. Recognize good work quickly. Say thank you in public, share good customer or patient feedback, and reward people who cover hard shifts. Recognition costs little and people notice it.
7. Offer benefits hourly workers actually use. In many hourly workforces, a large share of employees waive group health insurance, often because of the premium cost. Benefits they can use the first week, such as virtual care and low-cost prescriptions, matter more to them than a plan they cannot afford.
Get a free savings estimate based on your employee count.
Get Your Savings Estimate →How Can You Add Benefits Without Adding Cost?
A Section 125 plan lets employees receive certain benefits pre-tax. Because those dollars are not subject to FICA tax, the employer saves payroll tax. That saving can pay for new benefits, so the employer does not pay out of pocket.
Our Section 125 savings program adds these benefits for every employee, including those who waive your health plan:
- Unlimited virtual care with no copay
- $0-copay generic prescriptions
- Hospital indemnity cash benefits (see how hospital indemnity insurance works)
- More take-home pay: employee take-home pay typically rises about 4–6%
Most employers save $650–$850 per employee per year. The program fee is a per-employee monthly fee paid from those savings, with no setup fee and no minimum contract. It works alongside your existing health insurance and does not replace it. It requires at least 50 employees and is not available to businesses located only in certain states; see state availability and the full benefits list. For the rules behind it, read our Section 125 plan guide for employers.
Retention by Industry
- Quick-service restaurants: stable schedules and weekly pay matter most. Fast, simple onboarding helps teens and first-job workers stay past the first month.
- Home health care: caregivers work alone. Regular check-ins, paid travel time and quick access to care for themselves help keep them.
- Assisted living: short-staffed shifts drive people out. Fair shift rotation and visible career steps from aide to med tech help.
- Staffing agencies: placed workers stay longer when they get paid fast and have benefits that move with them between assignments.
- Landscaping and construction: seasonal crews come back when they were treated well, paid on time and given a clear rehire date.
Frequently Asked Questions
What is a normal turnover rate for hourly workers?
It depends on the industry. In 2025, BLS data shows about 5.5% of accommodation and food services workers left each month, compared with 3.3% across all industries. Home care agencies report annual caregiver turnover near 80%.
How much does it cost to replace an hourly employee?
A Center for American Progress review found the typical cost is about 16% of annual pay for jobs paying less than $30,000. For a $28,000-a-year worker, that is about $4,480.
When do most hourly employees quit?
Many hourly employees leave in their first weeks or months, before they feel settled in the job. That is why a planned first 90 days, with regular check-ins, is one of the most useful retention steps.
Which benefits help retain hourly workers?
Benefits they can use right away: virtual care with no copay, low-cost prescriptions, cash benefits for a hospital stay, and more take-home pay. A Section 125 plan can add these without raising employer costs.
Can a small business offer these benefits?
Our program requires at least 50 employees. Owners with more than one location can count employees across all their locations. It is available in 40 states.
This article is general information, not tax or legal advice. Talk to your tax advisor about your situation.
Sources
The rules and figures on this page come from these sources.
- Quits and separations: BLS Job Openings and Labor Turnover Survey
- Cost of replacing a worker: Center for American Progress